qotd: The public option is back

U.S. Senate

Committee on Health, Education, Labor & Pensions

September 15, 2016

Senators Introduce Resolution Calling for Health Care Public Option

Today, Oregon's Senator Jeff Merkley and Senators Charles E. Schumer (D-NY), Patty Murray (D-WA), Dick Durbin (D-IL) and Bernie Sanders (I-VT), along with 22 of their colleagues, introduced a Senate resolution calling for a public option in the health insurance market.

Senate Resolution

Supporting efforts to increase competition and accountability in the health insurance marketplace, and extend accessible, quality, affordable health care coverage to every American through the choice of a public insurance plan.

After nine whereases:

Resolved, that the Senate supports efforts—

 to build on the Affordable Care Act by ensuring that, in addition to the coverage options provided by private insurers, every American has access to a public health insurance option which, when established, will strengthen competition, improve affordability for families by reducing premiums and increasing choices, and save American taxpayers billions of dollars.

http://www.help.senate.gov/ranking/newsroom/press/senators-introduce-resolution-calling-for-health-care-public-option

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Comment by Don McCanne

This week an intensive campaign is being initiated in support of a "public option" - offering the choice of a public, nonprofit insurance plan which competes with private health plans. Our enthusiasm should be tempered.

Following are a couple of points to keep in mind, especially when you hear promises that the public option is a giant step towards single payer:

*  A public option will be only one more player in our costly, fragmented system of funding health care. It alone will bring us none of the important features of a single payer system such as efficiency, equity, systemic cost savings, and universality. The profoundly wasteful administrative complexity will remain.

*  Previous efforts by Congress, heavily influenced by the insurance industry, to design a public option led to a highly flawed model that would prevent the "unfair" competitive advantage that a government program would otherwise have over the private insurance industry. This same insurance industry influence is precisely why the co-op models authorized by ACA are now failing. And there is absolutely no reason to believe that the insurance industry might change its tune now.

*  The public option has been characterized as a Medicare buy-in. But Medicare is an equitably funded social insurance program covering everyone who is eligible, whereas the public option would be just another individual plan in a market of private plans, likely with higher premiums because of adverse selection.

*  If a public option were to be enacted some believe that it would be only a matter of time before everyone would want in once it demonstrates its superiority, and then we would have a de facto single payer system. You need look only at the experience with the conspiracy between Congress and the private insurance industry in the establishment of the private Medicare Advantage plans that compete with traditional Medicare. Congress has given the private plans an unfair advantage so Medicare beneficiaries are moving from the public program to the private plans in ever greater numbers - the exact opposite of what the public option supporters visualize.

*  The Affordable Care Act drew support of much of the progressive community as it seemed to them to be the only politically feasible approach at the time. Thus the clamor for comprehensive reform died down. We are hearing again that single payer is not feasible, but the public option is. When the public option is enacted, it will be mislabeled as single payer, and then it will be exposed for the miserable failure that it will be because it was designed by the private insurance industry to fail (like the co-ops). The single payer concept will have been tarnished, and it could be decades before our nation would recover and be ready for reform that really works. In the meantime, millions would have gone broke, suffered, and died merely because we didn't think single payer was feasible.

Many look to Jacob Hacker for inspiration on enacting and implementing a public option. But he has identified the greatest barrier to moving forward. In a recent Vox article, he wrote, "Private plans lobbied aggressively against the public option in 2009 on the grounds that it would amount to unfair competition. But insurers don't want a level playing field; they want the field tilted in their favor."

Now see if you can find a Congress that doesn't tilt the field in favor of the private insurers. Not even on the horizon.

qotd: Out-of-pocket expenses drag 11 million people into poverty

United Census Bureau

September 2016

The Supplemental Poverty Measure: 2015

By Trudi Renwick and Liana Fox

This is the sixth report describing the Supplemental Poverty Measure (SPM) released by the U.S. Census Bureau, with support from the Bureau of Labor Statistics (BLS). The SPM extends the official poverty measure by taking account of many of the government programs designed to assist low-income families and individuals that are not included in the current official poverty measure.

In 2015, 45.7 million people were poor using the SPM definition of poverty, more than the 43.5 million using the official definition of poverty with the adjusted universe.

The SPM and the Effect of Cash and Noncash Transfers, Taxes, and Other Nondiscretionary Expenses

(Excerpt):  Without subtracting MOOP (Medical Out-of-Pocket) expenses from income, the SPM rate would have been 3.5 percentage points lower. In numbers, 11.2 million fewer people would have been classified as poor.

https://www.census.gov/content/dam/Census/library/publications/2016/demo/p60-258.pdf

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Modern Healthcare

September 13, 2016

Uninsured rate drops, but medical expenses still drag millions into poverty

By Bob Herman

However, separate census data showed that medical out-of-pocket expenses dragged 11.2 million people into poverty in 2015, a potential symptom of the shift of moving employees and individuals into health plans that have higher deductibles, copays and coinsurance rates.

http://www.modernhealthcare.com/article/20160913/NEWS/160919973

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Comment by Don McCanne

We read repeatedly about how out-of-pocket health care spending is exposing patients to financial hardship. Yet our policymakers are continuing to expand that exposure under the screwball concept that spending out of pocket makes patients better health care shoppers, which we know is not true. It only makes them forgo beneficial care. Today's number should be an awakening call: in 2015, out-of-pocket health care expenses shoved 11 million individuals into poverty!

At a time when we need to improve our anti-poverty programs, we are pushing more people into poverty through policies inherent in our dysfunctional health care financing system. With a well-designed single payer system, nobody would be forced into poverty because of medical bills.

Or should we continue with policies that prevent people from getting the care they should have, while forcing millions into poverty? How could anyone think that we really have a choice here?

qotd: Deductibles soar in employer health plans

Kaiser Health News

September 14, 2016

Studies: Employer Costs Slow As Consumers Use Less Care, Deductibles Soar

By Jay Hancock and Shefali Luthra 

Employer health insurance expenses continued to rise by relatively low amounts this year, aided by moderate increases in total medical spending but also by workers taking a greater share of the costs, new research shows.

Average premiums for employer-sponsored family coverage rose 3.4 percent for 2016, down from annual increases of nearly twice that much before 2011.

But 3.4 percent is still faster than recent economic growth, which determines the country's long-run ability to afford health care.

And the tame premium increases obscure out-of-pocket costs that are being loaded on employees in the form of higher deductibles and copayments. Another new study suggests those shifts have prompted workers and their families to use substantially fewer medical services.

Since 2011, the average deductible for single coverage has soared 63 percent, according to the survey, while workers' earnings have gone up by only 11 percent.

Change from 2011 to 2016 (from graph available at KHN link below):

6%   Overall inflation

11%  Workers earnings

19%  Single coverage premiums

63%  Single coverage deductibles, all workers

Members of high-deductible plans paid nearly a fourth of their total medical costs out of pocket versus only 14 percent for members of conventional plans.

Average annual 2016 premiums for single coverage were $6,435 for single coverage and $18,142 for family coverage, according to the Kaiser report.

http://khn.org/news/studies-employer-costs-slow-as-consumers-use-less-care-deductibles-soar/

KFF 2016 Employer Health Benefits Survey:

http://kff.org/health-costs/report/2016-employer-health-benefits-survey/

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Comment by Don McCanne

Although most media attention has been directed toward health plans offered by the ACA exchanges, most individuals actually obtain their insurance through their employment, so it is important to observe what is happening there, and the news is not so good.

In the past five years, inflation has remained low and wage increases have almost doubled the rate of inflation, and that's the good news. Medical costs have continued to increase at a rate greater than inflation, and that has contributed to the tripling of insurance premiums. But what is really disturbing is that the rate of increase in plan deductibles is ten times the rate of inflation. Ten times!

Many enrollees in the ACA exchange plans receive government subsidies to help pay for their premiums and deductibles, but those those subsidies are not available for the majority who receive their coverage from their employer (though higher-income employees unfairly benefit from tax expenditures that help pay their premiums).

Fortunately, the majority of workers and their families are quite healthy and have little need for health care. It is those families that have greater medical needs that are now facing these high deductibles. Precisely those individuals who need help paying their medical bills are the ones being punished with financial penalties for being sick (the financial penalties being high deductibles and other cost sharing).

Our geniuses in the policy community came up with the concept of incentivizing enrollment in low actuarial value plans in the ACA exchanges - the ones that require high deductibles to reduce the pressure to increase premiums. Employers have quickly latched onto that concept and are now increasing the deductibles in their plans to levels that will cause financial hardship for too many families.

Did you catch that line above? The one that says that we are assessing financial penalties against those unfortunate enough to have significant medical needs. Isn't just suffering from medical problems enough punishment for the unfortunate? Or maybe we don't even want them to be punished. Maybe we would prefer to help them, as other civilized societies do.

Let's fix this system. A single payer national health program with first dollar coverage would be a great start.